TITLE: Autofrigo Europe S.r.l., B-292753, November 20, 2003
BNUMBER: B-292753
DATE: November 20, 2003
**********************************************************************
Autofrigo Europe S.r.l., B-292753, November 20, 2003
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: Autofrigo Europe S.r.l.
File: B-292753
Date: November 20, 2003
Michael J. Gardner, Esq., Robert E. Korroch, Esq., Francis E. Purcell,
Jr., Esq., and Michael Zuppa, Esq., Williams Mullen, for the protester.
John A. Burkholder, Esq., McKenna Long & Aldridge, for EBREX Food Services
S.a.r.l., an intervenor.
J. Albert Calluso, Esq., and Marlene M. Surrena, Esq., Defense Logistics
Agency, for the agency.
Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency reasonably awarded a contract for commercially available, prime
vendor food and non-food distribution services to the offeror which
submitted the higher technically rated, lower priced proposal.
DECISION
Autofrigo Europe S.r.l. protests the award of a prime vendor contract to
EBREX Food Services S.a.r.l. under request for proposals (RFP) No.
SPO300-02-R-4003, issued by the Defense Supply Center Philadelphia,
Defense Logistics Agency, for full line food and non-food distribution
services in Southern Europe (the Azores, Spain, France, Italy, Greece,
Turkey, Bulgaria, Macedonia, Kosovo, Romania, ships at any port of call in
Europe south of the Alps, and United States military exercises in Europe
south of the Alps or northern Africa). Autofrigo challenges the agency*s
evaluation of proposals.
We deny the protest.
BACKGROUND
The RFP for this commercial item acquisition was issued on May 10, 2002 on
an unrestricted basis and contemplated the award of an
indefinite-delivery/indefinite-quantity, fixed-price contract with an
economic price adjustment for the base period and four 1-year option
periods to the responsible offeror whose proposal was determined to
represent the best value to the government, with technical evaluation
factors being considered significantly more important than price. The RFP
contained the following technical evaluation factors, listed in descending
order of importance: experience/past performance, product availability,
distribution systems/capability, quality assurance, contingencies, and
back-up zone plans. Each of these technical evaluation factors contained
a number of subfactors. The RFP provided that these factors and
subfactors would be evaluated by assigning one of the following adjectival
ratings: excellent, good, fair, and poor.
With respect to price, the RFP contained the following pricing formula:
Unit price = Delivered Price + Fixed Distribution Price
The RFP defined *unit price* as the total price (in United States
currency) that is charged to the agency per unit for a product delivered
to the government. RFP at 141. The RFP defined *delivered price* as the
manufacturer/supplier*s actual invoice price (in United States currency)
to deliver the product to the prime vendor*s distribution point. RFP at
140. Under the RFP, the delivered price may change once every 2 weeks,
i.e., *[v]endors may change prices in their STORES [Subsistence Total
Order and Receipt Electronic System] Vendor Item Catalog once every two
weeks.* RFP at 12.[2] Finally, the RFP defined *fixed distribution
price* as a fixed price, offered as a dollar amount, which represents all
elements of the unit price (except the delivered price), for example,
general and administrative expenses, overhead, profit, packaging costs,
transportation costs, and any other projected expenses associated with the
distribution function; under the RFP, the distribution price remains fixed
for each year of contract performance. RFP at 140.
In order to evaluate offerors* prices on an equal basis, the RFP required
offerors to propose prices for 86 core food and non-food items. For a
number of these core items, the RFP required an offeror to provide
invoices or written quotations to support the prices proposed. For each
core item, the RFP listed an estimated quantity (based on previous
customer usage) that would be multiplied by an offeror*s unit price
(i.e., delivered price per unit plus distribution price per unit), and the
extended prices from these computations would be added together to
determine an offeror*s aggregate price. While the RFP emphasized that
core item delivered prices were for evaluation purposes only, the RFP also
advised that these proposed delivered prices should not dramatically
change for orders placed early in the contract unless documented market
conditions were established. RFP at 117. Under the RFP, an offeror*s
aggregate price for the base period and for each of the option periods
would be added together to determine the offeror*s total aggregate price
to the government. The RFP stated that an offeror*s distribution and
aggregate prices would be evaluated in accordance with Federal Acquisition
Regulation (FAR) S: 15.4. RFP at 153. The RFP also stated that an
offeror*s aggregate price would be evaluated for reasonableness and
overall low price to the government. The RFP further called for the
agency to evaluate the cost/price realism of the offeror*s proposal to
determine an offeror*s understanding of the RFP requirements and whether
the prices proposed were realistic in terms of the performance
requirements. RFP at 160.
Two firms--Autofrigo, as teamed with MDV/Nash Finch, and EBREX, as teamed
with Lankford SYSCO--submitted initial proposals. (EBREX has been the
incumbent prime vendor contractor for Southern Europe for the past 5
years. Under the predecessor contract, Lankford SYSCO, which holds a
number of prime vendor contracts in its own right, was EBREX*s domestic
food supplier, and Autofrigo handled warehouse functions for EBREX in
Italy and at other southern Mediterranean locations. MDV/Nash Finch is a
domestic food supplier and has held an agency prime vendor contract for
ship support in Norfolk, Virginia.) The proposals of Autofrigo and EBREX
were included in the competitive range and following discussions, both of
these firms submitted final proposal revisions that were evaluated as
follows:
+------------------------------------------------------------------------+
| |Autofrigo |EBREX |
|-----------------------------------+----------------+-------------------|
|Experience/Past Performance |[deleted] |[deleted] |
|-----------------------------------+----------------+-------------------|
|Product Availability |[deleted] |[deleted] |
|-----------------------------------+----------------+-------------------|
|Distribution Systems/Capability |[deleted] |[deleted] |
|-----------------------------------+----------------+-------------------|
|Quality Assurance |[deleted] |[deleted] |
|-----------------------------------+----------------+-------------------|
|Contingencies |[deleted] |[deleted] |
|-----------------------------------+----------------+-------------------|
|Back-up Zone Plans |[deleted] |[deleted] |
|-----------------------------------+----------------+-------------------|
|OVERALL PROPOSAL RATING |GOOD |EXCELLENT |
+------------------------------------------------------------------------+
Source Selection Decision Document, May 5, 2003, at 3-4.
The total delivered, distribution, and aggregate prices for the base and
option periods as submitted by Autofrigo and EBREX were as follows:
+------------------------------------------------------------------------+
| |Autofrigo |EBREX |
|-----------------------------+--------------------+---------------------|
|Total Delivered Price |$[deleted] |$[deleted] |
|-----------------------------+--------------------+---------------------|
|Total Distribution Price |$[deleted] |$[deleted] |
|-----------------------------+--------------------+---------------------|
|TOTAL AGGREGATE PRICE |$[deleted] |$[deleted] |
+------------------------------------------------------------------------+
Id. at 6.
As evident from this chart, Autofrigo*s total aggregate price was
$[deleted], or 12.2 percent, higher than EBREX*s total aggregate price.
While EBREX*s total delivered price was $[deleted], or 0.08 percent,
higher than Autofrigo*s total delivered price, Autofrigo*s total
distribution price was $[deleted], or 55.9 percent, higher than EBREX*s
total distribution price. Id.
The source selection authority (SSA) determined, based on an integrated
assessment of the proposals submitted by Autofrigo and EBREX, that the
proposal submitted by EBREX represented the best value to the government.
Among other things, the SSA noted that EBREX, as the incumbent contractor,
had experience with both normal and contingency situations and had
performed at a high level. The SSA further noted that Lankford SYSCO,
EBREX*s domestic food supplier, was one of, if not the largest,
institutional food distributor in the world; as a result, the SSA
concluded that EBREX would be able to optimize product availability based
on Lankford SYSCO*s network of supply houses throughout the United
States. The SSA pointed out that EBREX*s inventory plan [deleted] would
help to assure consistently high fill rates for customers. The SSA
commented on EBREX*s vast experience in electronic data interchange to
ensure that the cataloging, ordering, and invoicing processes would run
smoothly. Finally, the SSA pointed out that over the 5-year term of the
contract, the government would save more than $[deleted] million by
awarding the contract to EBREX. Id. at 7.
In contrast, the SSA noted that Autofrigo itself lacked experience
comparable to that required by the RFP, but did acknowledge that
Autofrigo*s team member, MDV/Nash Finch, did have such experience. (The
SSA noted that Autofrigo*s [deleted] rating for the experience/past
performance technical evaluation factor was *heavily influenced* by the
experience/past performance of MDV/Nash Finch. Id. at 4.) The SSA
commented that Autofrigo*s proposed inventory management system, which was
based on one warehouse facility in Italy serving as the hub where most of
the stock would initially be placed for later relocation to other
warehouses, was considered risky in terms of late deliveries to, or low
fill rates for, locations outside of Italy. The SSA pointed out that
Autofrigo did not have any direct electronic data interchange experience.
Lastly, the SSA recognized that Autofrigo*s total aggregate price was
higher than EBREX*s total aggregate price. Id. at 7.
On this record, the SSA determined that EBREX*s higher technically rated,
lower priced proposal represented the best value to the government.
ISSUES AND ANALYSIS
Fill Rate
The RFP required offerors to propose a minimum fill rate (i.e., generally,
a percentage measurement of the number of cases accepted (excluding, for
example, mispicks and damaged cases) versus the number of cases ordered)
of 97 percent, and to provide detailed information (e.g., proposed
in-house and in‑transit inventory levels) clearly demonstrating how
the proposed fill rate would be satisfied by the offeror. RFP at 67.[3]
Under the RFP, an offeror*s proposed fill rate would be evaluated under
the following two technical evaluation factors: first, under the
experience/past performance technical evaluation factor, the agency would
assess whether the offeror has consistently provided timely delivery of
quality products with consistently high fill rates and, second, under the
proposed fill rate subfactor under the product availability technical
evaluation factor, the agency would evaluate the offeror*s proposed
in-house and in-transit inventory levels to ensure that the offeror
clearly demonstrated how the stated goals would be satisfied.
Under the predecessor contract, EBREX had an overall average fill rate of
[deleted] percent, with a [deleted]-percent fill rate for smaller orders.
Contracting Officer*s (CO) Statement, Sept. 11, 2003, at 16. In response
to this RFP, EBREX proposed a [deleted]‑percent fill rate.
(Autofrigo also proposed a [deleted]-percent fill rate.) As described
above, EBREX proposed to achieve this [deleted]‑percent fill rate
[deleted]. The agency assigned ratings of [deleted] to EBREX*s proposal
under the experience/past performance technical evaluation factor and
under the proposed fill rate subfactor under the product availability
technical evaluation factor.
In its protest, Autofrigo, a warehousing subcontractor to EBREX in Italy
under the 5‑year predecessor contract, claimed, based on invoices
for a 4-month period (May and June, 2002, and April and May, 2003), that
EBREX achieved only a 74.5 percent fill rate as the incumbent contractor.
Protest, Aug. 22, 2003, at 13-14, 17. In its comments, Autofrigo claimed,
based on 17 months of fill rate source documents for the period from
January 2002 to May 2003, that EBREX*s fill rate was 87.95 percent.
Protester*s Comments, Oct. 6, 2003, at 15. Autofrigo contends that these
fill rates reflect a record of poor past performance by EBREX and do not
support the [deleted] ratings assigned to EBREX*s proposal under the
relevant technical evaluation areas.
In reviewing a protest against an agency*s proposal evaluation, we will
consider whether the evaluation was reasonable and consistent with the
terms of the solicitation and applicable statutes and regulations.
Consolidated Servs. Worldwide, Inc., B-290751.7, Oct. 21, 2002, 2002 CPD
P: 185 at 4.
As a threshold matter, we point out that Autofrigo does not challenge
EBREX*s proposed technical approach, as described above, for purposes of
achieving the firm*s proposed [deleted]-percent fill rate. Rather,
Autofrigo, relying on its own calculation of a lower fill rate for EBREX,
questions the reasonableness of the agency*s evaluation of EBREX*s
proposed fill rate. We conclude, however, that Autofrigo*s calculation of
a lower fill rate for EBREX under the predecessor contract is materially
flawed and, accordingly, provides no basis for our Office to question the
reasonableness of the agency*s evaluation in this regard.
More specifically, under the predecessor contract, Autofrigo, as EBREX*s
warehouse subcontractor in Italy, had access only to that information
involving EBREX*s operations in Italy. Under that contract, fill rate
data for EBREX was calculated weekly, monthly, and yearly for all
customers in the following seven categories: Macedonia, the Azores, ship
support, Spain, Italy, Turkey, and remote customers. For the period from
January 2002 to May 2003, Autofrigo, as EBREX*s warehouse subcontractor in
Italy, only supported agency customers in Italy (approximately 11 percent
of the orders placed under the predecessor contract) and provided ship
support (approximately 12 percent of the orders placed under the
predecessor contract); in its capacity as EBREX*s warehouse subcontractor
in Italy, Autofrigo did not support agency customers in Macedonia, the
Azores, Spain, Turkey, and remote customers, which support represented
approximately 77 percent of the orders placed under the predecessor
contract during the referenced timeframe. CO Statement, Oct. 9, 2003, at
2. Autofrigo does not dispute these facts. See Protester*s Supplemental
Comments, Oct. 15, 2003. On this record, we conclude that Autofrigo*s
calculation of EBREX*s fill rate reflects only a small portion of EBREX*s
operations (Italy and ship support) for a limited period of time during
the 5-year period of contract performance and cannot reasonably be
extrapolated to reflect a fill rate covering EBREX*s total operation as
the incumbent contractor. We also note that the agency*s records for the
period from January 2002 through May 2003 show that EBREX*s overall
average fill rate was [deleted] percent, an amount significantly higher
than the fill rate calculated by Autofrigo. CO Statement, Oct. 9, 2003,
at 2. Therefore, where Autofrigo does not challenge EBREX*s proposed
technical approach for purposes of satisfying the firm*s proposed
[deleted]-percent fill rate and where Autofrigo*s calculation of EBREX*s
fill rate is based on materially incomplete data, there is no basis for
our Office to question the reasonableness of the agency*s evaluation of
EBREX*s proposed fill rate.
Cost/Price Realism
Autofrigo argues that the agency failed to reasonably assess the realism
of EBREX*s proposed delivered prices, contending that EBREX*s proposed
delivered prices for the 86 core items are substantially understated
vis-`a-vis the actual delivered prices charged by EBREX to the government
under its predecessor contract for these items. Protester*s Comments,
Oct. 6, 2003, at 4. As a result, Autofrigo maintains that the agency runs
the risk that the delivered prices EBREX will actually charge to the
government will be significantly higher than the delivered prices it
proposed for evaluation purposes. We conclude, however, that this
argument lacks merit.
Here, as acknowledged by Autofrigo, the agency compared the delivered
prices proposed by Autofrigo and EBREX and concluded that while EBREX*s
total delivered price was slightly higher (by 0.08 percent) than
Autofrigo*s total delivered price, each firm*s total delivered price was
fair and reasonable. See FAR S: 15.404-1(b) (describing a number of price
analysis techniques that may be used to determine whether proposed prices
are fair and reasonable, including comparing the prices received in
response to a solicitation). In this context, where Autofrigo and EBREX
proposed virtually identical total delivered prices, and where, during
contract performance, delivered prices, no matter who the contractor is,
are subject to market fluctuations, we are at a loss to understand why
Autofrigo believes that EBREX*s proposed delivered price was not
realistic. On this record, Autofrigo has provided no meaningful basis for
our Office to question the reasonableness of the agency*s conclusion that
EBREX*s proposed delivered price was fair, reasonable, and realistic.
Finally, we believe that it is significant to point out that Autofrigo*s
total proposed distribution price was 55.9 percent higher than EBREX*s
total proposed distribution price. This disparity caused Autofrigo*s
total aggregate price (delivered price plus distribution price) to be 12.2
percent higher than EBREX*s total aggregate price. Autofrigo does not
challenge the reasonableness of the agency*s price evaluation in this
regard. Therefore, where EBREX, the successfully performing incumbent
contractor, proposed the lowest total aggregate price, and where EBREX*s
proposal received a higher technical rating than Autofrigo*s proposal, we
conclude that the agency reasonably selected EBREX*s higher technically
rated, lower priced proposal for award.
The protest is denied.
Anthony H. Gamboa
General Counsel
------------------------
[1] This decision addresses the two primary issues presented in
Autofrigo*s protest. Autofrigo raised a number of collateral issues that
we have considered and find to be without merit; these collateral issues
do not warrant detailed analysis or discussion.
[2] The RFP provides that, after award, customers will be able to add
additional food items to the contract during establishment of the
catalog. The RFP requires the contracting officer to determine, among
other things, that the items are fairly and reasonably priced. RFP at 27.
[3] The RFP stated that the proposed fill rate of 97 percent or higher
would become the contract requirement upon award.